The Law: Can a boss be personally liable in an employment lawsuit?

A New York jury awarded $1.2 million to Robert De Niro’s former personal assistant in November, finding one of his companies responsible for subjecting her to a sexually hostile and retaliatory work environment.

Ironically, the jury found De Niro was not personally liable for the alleged harassment and retaliation, even though he allegedly never gave her time off, assigned her tasks beneath her title, underpaid her because she was a woman, and subjected her to other behavior like scratching his back or talking to her on the phone while he urinated.

De Niro’s lawyer proudly claimed after the verdict, “They got it right as to Mr. De Niro, that’s for sure.”

Usually, only the employer is sued as an entity.

However, as the De Niro lawsuit indicates, many plaintiffs are naming the employer as well as the person accused of committing the alleged violation. If successful against the supervisor, for example, the plaintiff can collect the judgment from the supervisor’s personal bank account, retirement fund, etc.

Why are plaintiffs allowed to sue a supervisor or a human resource person?

Individual liability

The basis for individual liability is found in many employment law statutes’ definition of the term “employer.”

For example, the Family Medical Leave Act incorporates the definition of an employer from the Fair Labor Standards Act, and states that “any other person who acted directly or indirectly, in the interest of an employer” may be held personally liable for a violation of the two pieces of legislation.

As a result, a supervisor or human resource director who fires an employee because of excessive absenteeism could be held personally liable if the termination violated the Family Medical Leave Act.

The results have not been promising for managers and human resource professionals in both wage and hour and family medical leave litigation.

In one 2013 New York case, a supermarket company’s owner and CEO was found personally liable for millions of dollars in a FMLA wage class action lawsuit.

In 2000, an Iowa federal judge ordered a human resource director to personally pay $40,000 in damages for an FMLA violation in addition to damages that the employer was ordered to pay.

Several additional federal statutes — such as the Equal Pay Act, Employment Retirement Income Security Act (ERISA) and the Health Insurance, Portability and Accountability Act (HIPAA), allow suing supervisors and other employees in their personal capacity.

In one high-profile lawsuit, for example, female attorneys sued a New York law firm and its managing partners for sex discrimination in pay.

However, the federal statutes are not consistent regarding individual liability.

For example, federal statutes such as Title VII of the Civil Rights Act, the Americans with Disabilities Act as amended or the Age Discrimination statute do not permit individual supervisor liability.

Finally, under Iowa law the Iowa Supreme court has held that the Iowa Civil Rights Act’s plain language allows supervisory employees to be individually liable.

Reducing liability

In any event, employers, supervisors and human resource professionals can reduce the likelihood of personal liability in a number of ways.

Juries do not like employers or supervisors tampering unfairly with an employee’s job. Accordingly, evidence of good faith and fair dealing with employees can be a powerful defense. Supervisors and human resource directors should take extra steps to show they were not “out to get” the employee or judging the employee too harshly.

Bad faith will be found from direct evidence (“I can’t stand you”) or can be inferred from a manager’s preferential practices, negligent practices or failure to follow standard company procedures.

As a result, employers should always document employee files accurately.

Similarly, regular training of all employees regarding their legal obligations shows employers are committed to doing the right thing.

Courts and juries assume employers acted intentionally when they fail to train managers on basic employment issues. Moreover, better trained management employees hopefully result in fewer mistakes and fewer reasons for a jury to blame them, or the employer.

Wilford H. Stone is a lawyer with Lynch Dallas in Cedar Rapids. Comments: (319) 365-9101; wstone@lynchdallas.com